The Emperor’s New Network Effects

Smart piece by Greg Cox:

So I think there are three potential outcomes in the mobile handset industry that are worth contemplating:

  1. Android dominance implies a future where the industry is horizontal, with an OS vendor creating a dominant application platform with its associated network effects (demand side economies of scale).

  2. iOS dominance implies a future where Apple enjoys the demand side economies of scale associated with a dominant application platform, and the supply side economies of scale associated with being the leading handset manufacturer.

  3. iPhone leadership implies a future where the dominant player is a vertically integrated handset manufacturer that enjoys supply side economies of scale in manufacturing and marketing.

Count me in with Cox: #3 seems to be where we’re heading, but most analysts seem unwilling to consider any outcome other than #1 or #2.

★ Monday, 2 May 2011